China's sudden retail slowdown shows need to boost spending

Retail sales rose 3% from a year ago, the slowest in 3 months; cosmetics led the fall

BEIJING - China's retail sales growth unexpectedly weakened in November despite signs of improvement in the housing market, highlighting the urgency for Beijing to further encourage residents to spend.

Retail sales rose 3 per cent from a year ago, the slowest pace in three months and undershooting even the most bearish of forecasts. Industrial output increased 5.4 per cent, keeping momentum as the manufacturing side of the economy continues to outperform consumer spending.

"The data show that the recovery in domestic demand has remained sluggish, while the stabilisation in industrial production was likely due to some order front-loading ahead of US tariffs and is not sustainable," said Ms Michelle Lam, Greater China economist at Societe Generale.

The data released by the National Bureau of Statistics (NBS) on Dec 16 underscores the need for Beijing to reignite consumers' willingness to spend, especially after the re-election of Donald Trump as US president. The threat of a new trade war may diminish exports' role as a growth driver after contributing to nearly a quarter of economic expansion this year.